All too often I see traders struggle with longer term wave patterns. Their desire to correctly label the chart often leads to one's inability to be nimble.
The weekly chart of the Aussie Dollar shows a triangular wave pattern. All an elliottician needs to know is that price should remain in a sideways fashion until the pattern resolves. Since, triangles can only be found in w.4 and w.B or w.e of a triangle, labeling the adjacent waves becomes irrelevant (except under 3 below) and we know that price will make a final thrust move to new highs in this case.
This frees up a trader's mind and allows one to trade the pattern!
Since triangles are present right before a terminal move, traders have the following options when day trading triangles:
- Trade the three wave swing of w.b, w.c, w.d, w.e.
- Wait until w.e concludes and go long.
- Reverse after the trust out of the triangle reaches it's termination point.
Of course, you must follow your individual trade plan for entry. The wave principle is only a guide to market position and an anticipated market direction.
In conclusion, I find that KISS (keeping it simple stupid) applies best to using elliott wave in isolation. I've been wrong many times as to the duration of the move, but getting the initial direction correct improves the probability of a successful money making trade.
I hope you found this lesson helpful and ...
Best of Trading
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